Online and virtual business that sell goods out of the state where their physical warehouse and factory are located nearly always operate their sales and logistics through multi-state and multi-country warehousing companies.

The major advantage of using large-scale warehousing company services is the convenience for your customers and the logistics advantages for your company. The cost of real estate for warehousing inventory is high. The cost of labor involved in the warehousing, packaging, and shipping functions is also high. The cost of labor for packaging, addressing, and shipping orders is often greater than the costs involved in warehousing company costs. Fulfilment companies bundle all those costs and can provide more efficient service than most companies can provide on their own. Those advantages are basic and will never go away.

For many years doing business on an online basis had a major economic advantage. According to Supreme Court rulings in 1967 and 1992, “states may not collect taxes on sales in a state from retailers that do not have a physical presence in the state.” That was very convenient. In other words, according to these court rulings, for states to collect taxes, a company must have nexus or “substantial physical presence” within the state.

To get around the nexus requirement, in order to collect needed taxes, states have begun replacing physical nexus with “economic nexus,” defining “substantial” in economic terms rather than physical terms. If a company uses a warehousing company that operates out of a warehouse in a state, that suddenly becomes sufficient nexus for the state to begin to collect taxes from the company.

The Supreme Court also ruled that using a common carrier and mail to deliver goods between states does not constitute nexus within the destination state. If a company had its goods delivered by mail, it would not have to collect state taxes. However, if the online retail company uses a warehousing company that has a warehouse in the state, and the retailer owns property within that warehouse (which the warehousing company packages and ships on order), then the retailer is said to have sufficient nexus in the state and has to pay the state taxes.

Multi-State Warehouse Outsourcing

State laws regarding tax compliance and nexus are varied and confusing under the present state of affairs. If you are a company that extensively uses inter-state warehousing companies you have to take a serious and objective look at the way your inventory is handled within each state and what current state nexus laws are. In those states where you may be obligated to collect and pay state taxes, you may want to evaluate whether there is exposure for uncollected sales tax and what impact this nexus may have for future compliance.

In order to bring order to the nexus controversy the senate passed a “Marketplace Fairness Act” in 2013. This federal act requires that online companies must collect and remit state taxes in states where they do more than a million dollars in annual revenue. There is also an effort to get state agreement on a “streamlined sales and use tax” which would streamline the confusion of state tax laws. Nearly half of the states have signed on so far.

Any company that operates online and uses multi-state warehousing companies should be on the lookout for changes in state tax laws that may affect you. Nexus applies to both sales tax and income tax. However, the nexus rules for income tax often requires “a more intense level of business dealing in a state.”

Cross-border online sales may account for a significant portion of total e-commerce orders over the next few years. The rules for international warehousing are even more complex because of restrictions as to what can or cannot be legally shipped into various countries. The cost of duties and other taxes can multiply the shipping charges more than ten times in some cases.

International Shipping Considerations

It is possible to take much of the headache out of international shipping by hiring an international company to manage international orders. Many warehousing companies that operate internationally can warehouse your inventory in their warehouse locations overseas and distribute your orders from there, avoiding importation altogether. Shipping can be at domestic, rather than international rates.

In many cases, due to nexus concerns, using warehousing services for interstate distribution may be more problematic than using warehousing services for international shipping. In the case of interstate distribution, the warehousing service may add to costs because of nexus rules. In the case of international distribution, the warehousing service may drastically reduce the cost of distribution.

When making decisions about interstate and international distribution, insightQuote can help you research and find the best warehousing company for your business. Please contact us to learn more.

Three Simple Tests to Make Sure Your Fulfillment Company is up to the Challenge

It makes perfect sense – have your fulfillment company, who already stores and ships your goods, handle your upcoming kitting project. After all, they are experienced in picking and packing orders and should be able to complete it without any issues, right? Unfortunately, the answer may very well be “no” if they don’t have some fundamental practices in place. Make sure that you talk to your fulfillment provider about these key indicators of success before you pass them your next project.

Are Kitting Services a Part of Your Software?

Most fulfillment services companies use a warehouse management system that helps them keep track of receipts, inventory, orders, and shipping information electronically. This software oftentimes has sophisticated components that systematize the picking and shipping processes, helping to eliminate potential errors. And most of the warehouse management systems on the market today have a “kitting” component to them as well. This kitting component allows the system to track all of the components of the completed kit, so that the warehouse team can allocate all of the necessary products to be kitted together, take them out of inventory, track the number of completed kits once the project is finished, and monitor the number of finished units shipped and remaining in inventory. Is your fulfillment company using a software program to properly track and manage the flow of your kitting project from start to finish? If not, it could spell disaster, as manual processes are always subject to human error.

Who Handles the Kitting Project?

Another vital component to ensuring the success of your kitting project with an outsourced fulfillment provider is to make sure that the actual staff that will be completing the project is highly skilled and competent. Fulfillment companies are notorious for hiring “temp labor” to complete a kitting project. And while there is nothing inherently wrong with this thought process, be careful when it comes to the people that are actually processing your project – especially if it is a complicated project. The best scenario is to have people that are familiar with your company and your product, perform the kitting services. This way, you can remain confident that there won’t be a significant learning curve and corresponding error potential. And if the entire project can’t be completed by the internal full time staff of the fulfillment provider, at least make sure that a member of their team is managing the project. Things can easily spiral out of control when a temp worker that doesn’t have any familiarity with your product is suddenly thrust into the management of the kitting function. Ask your provider what staff will complete your project to gain comfort that it will be handled appropriately.

Do They Have a Process?

The last thing that you need is to have your fulfillment house fly by the seat of their pants when it comes to kitting. Make sure that they have standard operating procedures for these types of projects. Companies that successfully manage kitting projects usually have procedures manuals, allocated space with effective lighting, proper tools and relevant equipment to process work, among other things. Be sure to check with your provider about what processes they have in place to ensure success. And in particular, make sure that they have a method of tracking the success of the project. This will help everyone understand exactly what happened at every stage of the project.

Oftentimes, companies are unfamiliar with how warehousing storage prices work – so one of the most frequent questions we get asked is “how do companies charge for warehousing”? In order to help companies understand the costs associated with storing products or goods in a warehouse we created this article. There are a couple of ways different ways that companies charge for storage that you might encounter depending upon your unique situation. Most frequently, storage fees will fall under one of these three methods: Pallet storage fees, cubic footage fees, or square foot pricing.

Pallet Storage

One of the most popular ways by far that warehousing companies charge for storage is simply by the pallet. Typical pallet sizes are 48×40 and usually go about 4-6 feet high. This is how bulk product will be stored but if you do have pick and pack and fulfillment, then the warehouse might break some of this out in order to pick it more efficiently – therefore the overall number of pallets used in the warehouse would increase slightly in order to accommodate these “pick bins”. When billing out using this method, a warehousing company would total up the number of pallets at one time during the month – they would most likely literally have a person actually total the number of pallets but could also have it automated to calculate the pallets in the warehouse management system. Pallet storage fees are great for pallet scenarios but it becomes a little trickier for high pick scenarios where more pick bins are required. In these cases companies might be charged for more “air” under per pallet methodologies. Typical pallet storage costs range from $6 per pallet per month to upwards of $15 per pallet per month or more.

Cubic Footage Storage

Another way warehouses charge for storage is by the cubic footage. One advantage to this method is that it allows for the automation of the calculation of total storage space being used. For example, a company would simply enter in the dimensions of each company’s items in their warehouse management system, and using a simple automated algorithm, the warehouse can calculate the total cubic footage under management by simply multiplying the total units by the unit cubic footage and summing all of the SKUs. One good thing about this method is that it doesn’t overcharge you for “dead space”, which happens more with pallet storage. However, this method requires a lot more management in terms of always updating the correct dimensions of each SKU in the system and may have higher associated costs for receiving product into inventory since so much more care and information is required. Typical cubic footage costs range from about $.25 to $.45 per cubic foot.

Square Footage Storage

A third way that warehouses calculate storage fees are using square footage. This is far less common and is highly contingent upon the going rates in the specific market. This is more common for bulkier and non-standardized product that can’t fit into pallet spaces or racking. In this scenario, warehouses would charge the customer a set price per square foot. The warehouse may, contractually, require the customer to pay for a set amount of square footage, or the warehouse may only charge on actual space used – depending upon the individual agreement.

Other Factors That Affect the Warehousing Costs, Warehousing Charges, and Warehousing Prices and Fees

There are many other factors that can play a part in the actual storage charge. First, location is important. In areas where the cost of real estate is higher, the storage fees will be considerable higher. Second, costs can vary if the warehouse owns or leases the facility. In cases that a company has been around for quite some time and owns the building outright, more flexibility might be available to provide lower rates. Third, there are a number of special control requirements that can affect overall pricing. Examples of these factors are refrigerated or climate control storage or even special storage conditions, equipment, or licensing that costs the warehouse more in order to facilitate. In these cases, there will most likely be higher fees to cover the additional costs. Fourth, there may be additional costs to cover bonded warehousing or other insurance requirements. Finally, it’s important to understand that volume may impact overall pricing. In cases where a customer will be occupying a large volume of space, they may be able to command a lower rate.

If you’re searching for a food grade warehouse, there are a number of considerations that are extremely important to understand in order to make sure that you select the right provider for your business. To begin with, understanding the differences between the varying types of food grade warehouses offers some helpful insights. There are three main types of food grade warehousing companies – dry food storage companies, frozen food grade facilities, and refrigerated facilities. Frozen storage usually operates its environment within the temperature range of 0 degrees Fahrenheit and below. Refrigerated, or climate control facilities, can keep food at a comfortable temperature range of 34-39 degrees Fahrenheit. Finally, dry food grade storage facilities usually operate within the 50-70 degree Fahrenheit range. Between these three temperature ranges, companies can handle the different types of food needs for companies. Some warehousing companies offer all three types of temperature ranges, whereas some only specialize in one or two of the options – so you’ll have to check with the specific provider in order to determine if they can meet your needs.

Important Factors to Consider When Comparing Food Grade Warehouses

Once you find a provider that meets your needs with regard to the temperature requirements of your food products, you’ll want to investigate the potential provider’s overall capabilities, certifications, standards and procedures, and track record of success with managing food grade commodities for others. In order to feel comfortable with the vendor, it makes great sense to tour the facility in order to personally gauge the strict adherence to regulations. Some of the items below are most important to investigate:

Is the facility clean and free of bacteria, fungus or health hazards: Obviously, a food grade facility should be a very clean environment. In order to keep food in the required condition for consumption, it should be free of anything that would adversely impact its condition, such as bacteria or fungus. Make sure to keep a sharp eye open as you tour the facility.

Condition of the building and regulations: It’s important to check the overall health of the warehouse, both inside and out. In particular, check to make sure that it is well maintained (no cracks and holes in walls and windows) and that the doors are sealed, and check the overall temperature and humidity. This will keep pests out. Furthermore, the warehouse should have a pest control plan, detailing the precautions that the warehouse staff take in order to eliminate this risk. And definitely make sure that the outside of the building is well maintained and kept, as this can have an impact on the overall health of the facility.

Master sanitation schedule and overall SOP’s: Does the warehouse have a master sanitation schedule? One of the best signs of a high quality food grade warehousing company is the presence of detailed procedures, and a sanitation schedule should be at the top of the list. This schedule provides the details behind what measures and steps the personnel take in order to maintain a clean facility. Furthermore, every process and procedure should be logged in the company’s SOPs (standard operating procedures). These are detailed steps to ensure the quality operation of the warehouse and its staff.

Personal hygiene and training: As an extension of the sanitation schedule, the warehouse company should maintain a high degree of personal hygiene, including a detailed training schedule to make sure that the facility is adequately equipped with sinks, etc., and that staff are well trained in terms of maintaining their personal hygiene throughout their shifts. As a part of this function, make sure that the company has controls over any hazardous materials, such as cleaning supplies, etc.

Lot tracing and FIFO: Food products must be strictly controlled with regard to its age, and thus warehouses must have the capability of tracking product based upon lots and utilizing the FIFO (first in, first out methodology). In particular, check out the company’s warehouse management system to verify their capabilities.

Registered with the FDA: This one is a bit of a given, but be sure to check that the warehouse is in fact registered with the FDA. Occasionally, some warehousing providers aren’t aware of regulations for common, dry food products and lack the proper registration.

Software is a big part of your fulfillment process. Choosing the wrong software provider can leave you with backed up orders and sleepless nights, so it is important to take your time and properly vet software providers before making a decision.

Understanding the Unique Needs of Your Warehouse

Before you start looking for a software provider, you need to take stock of your own business. Break out a notebook and write down how your warehouse works and what you will need the software to do. There are several functions you may want your new software to cover:

Allow you to view invoices 24/7

Keep you up to date on returns

Offer you shopping cart integration

Create detailed reports

Forecast inventory

Send inventory alerts

View current and previous orders

Enable you to create new orders manually, if you choose

Search and edit orders as needed

Allow you to view detailed inventory reports

Allow you to view your fulfillment dashboard on multiple devices

Store your data online in a cloud

Automatically back up your data online throughout the day

Addressing Issues

Now that you know what you want software to do for you, you want to make sure that your software provider can deliver. Get examples of specifically how the potential software will address these issues. Software providers will be more than happy to show you demos of their software, and some may even let you try out a free trial. It is important to see how the software works, firsthand, to know how well it will fit in with your particular needs and work style.

Taking Care of Problems and Changes

So, after trying out a few types of software you may narrow it down to a few you really like. You’re not done. Now you need to see how well the software providers can help you if you have any problems. Find out the kind of customer service offered. For example, see if they offer online chat, phone service and email support. Next, ask them how quickly they will respond to requests, since in the warehouse, problems dictate immediate answers. If they cannot give you a timeframe, they may have poor customer service.

Also, upgrades to software keep your business on top of technological advances. Investigate how quickly the software provider will be able to implement new changes in the future or if this is even a possibility.

Once you have covered all of these steps, you will be able to choose the best software provider for your company, making your warehouse fulfillment operation run much more smoothly.

Thinking about outsourcing your warehousing needs? The decision shouldn’t be taken lightly as there are several pros and cons for outsourcing.

Pro: Storage that Grows and Shrinks as You Need It

If you have used your own warehouse for more than a year, you’ll understand how the flux of orders can require a bigger warehouse at times and a smaller one during slower seasons. Paying for a warehouse that doesn’t fit your needs doesn’t make sense, so outsourcing to a warehousing facility that will grow and shrink to fit your needs is a good idea.

Con: Inventory Won’t Be Onsite

One of the biggest problems with outsourcing your warehousing needs is that your inventory won’t be onsite with the rest of your business. Unless you choose a warehouse facility in your own town or city, you won’t be able to see or access your inventory very often.

Pro: Detailed Reports

Though you may not be able to see your inventory in person, warehouse facilities offer their clients up-to-date software that allows them to track inventory and more from their office. Also, the fact that a warehousing company is storing and reporting on your inventory means that you won’t need to hire someone for the job, saving on staff costs.

Con: Immediate Response

Since your warehouse may not be physically accessible, it may be hard to fix a problem as quickly as if the warehouse was onsite. Making back and forth phone calls can lead to frustration and delays on fixing problems. If you make sure to choose a reliable warehouse company with multiple customer service contacts, though, this con can be minimized.

Pro: Shipping

When choosing a warehouse company, you can pick one that will also ship your inventory directly to customers. They will take care of updating inventory spreadsheets, ordering shipping labels and boxes, handling returns and every other aspect of shipping. Allowing a warehouse company to take over these aspects allows you and your staff to focus on growing the company. And a lot of times, warehousing companies will be able to get you better rates than you could get yourself.

Con: Travel

If your warehouse isn’t nearby, you will need to travel there for the initial inspection and periodically to check on how well your inventory is being taken care of. This added expense may not factor into your budget.

Overall, outsourcing your warehouse can be a good fit for most businesses. It can save you time and can save your money as opposed to running your own. A warehousing facility allows you to hire fewer staff. Plus, you will always have a warehouse that is always the right size, with no wasted space. You will never be paying for more space than you need, nor will you need to move to a bigger facility and waste money on moving costs. If the pros outweigh the cons for you, make sure to choose a qualified warehousing company that will work with your company’s needs.

Many growing businesses come to the point where they have to decide whether to lease out a warehouse and hire talent to manage order fulfillment or to use an outsourced warehousing company. Let’s go over what goes into setting up a lease space and alternatively using a warehousing company.

Lease Space

You may be thinking about leasing a space to handle more order fulfillment needs as your company grows. Here are some questions to include in your research:

What size of warehouse will I need to handle busy seasons and future growth?

How many people do I need to hire including supervisors and operational staff?

Will I need seasonal staff?

What location has the best tax benefits while being centralized for my customer base?

What inventory software, computers, and IT experts will I need to invest in?

What kind of insurances are needed to ensure my business is covered?

Will I need to add extra staff for clerical duties and inventory management?

There are many topics that must be addressed prior to committing to leasing a space to ensure your businesses success. The other option is outsourced warehousing which takes the burden off your shoulders and takes less of your time and resources to get started.

Outsourced Warehousing

If you want to keep more of your money in inventory and marketing, consider outsourcing warehousing operations. You pay for the space you use throughout the season. This gives you opportunity to expand during busy times with worrying about hiring temporary workers. The warehousing company will allow you to focus on the other aspects of your business that will help you to succeed.

It’s no longer necessary to maintain your own warehouse! There are a vast amount of choices out there when selecting a warehousing company. Businesses want to make sure that their products arrive to their destination on time, in one piece, and cheaper than shipping on their own. Using a Top Warehousing Company can help save you time, stress and money. Because warehousing companies often get bulk discounts and can spread everyday costs among many different clients, you may find that outsourcing your warehousing may be very beneficial to your company’s success.

Processes and procedures in place for picking and shipping with minimal errors

Scanning and other technology to automate the picking and shipping process

Dedicated customer service support to answer shipping questions

Competitive pricing

How to Find a Top Warehousing Company

Once you know what qualities make up a Top Warehouse Company then you are ready to discover the warehouse that is the best for your company. Some of the ways you can find a Top Warehousing Company is by searching Google or other websites or by using word of mouth, such as contacting people that you know that might have a recommendation. To find a top warehouse not only should you research the internet, but you should also do your RESEARCH…By this we mean, go further than just using a few Google key words to locate the best company. Also ask for referrals, ask who their clients are, and look for ways to validate their claims. Warehousing can be cost-effective strategy for housing your goods, and if you choose a Top Warehousing Company, then your items will ship on time, they will get to the right customer and there will be fewer mistakes from the warehousing company.

Do More Than Just Search Online

Warehouses come in many shapes and sizes. When choosing a Top Warehouse, look for the qualities we have talked about, and be sure to conduct a detailed analysis. Do they have the best technology? Can they do more than just warehouse your goods? What are their return policies? Can they be trusted with your precious cargo? Don’t just Google “Top Warehouse.” Research, shop around and contact referrals!

A Full-Service warehouse will offer many different possibilities for your small business. Generally, a warehouse will store and ship your goods. What else does a full service warehouse do?

Pick and Pack

Displays and Assemblies

Labeling

Pallet Exchange

Kitting

Fulfillment

Understanding what services public warehouses have to offer, can help you make the right decision on which warehousing company is right for your business.

Is the Warehouse a Public or Contract Warehouse?

A public warehouse may store your goods for a limited time. They provide you with space and you provide the equipment and people to ship items. A Contract Warehouse handles the shipping, receiving and storing of goods on a contracted basis.

The following are basic offerings of a warehouse:

Pick N Pack

Processing small to large quantities of product, disassembling them, and shipping the product for each destination and re-packaging with shipping label affixed and invoice included.

Distribution

Storing, Transporting and Shipping Goods.

Order Fulfillment

Examples of fulfillment operations would include operations that process shipments for mail-order catalogs, internet stores, or repair parts.

Finding a Warehouse that offers Full Service can help save you time and money. There are many companies that offer Pick and Pack, and Order Fulfillment. What else do they offer? Do they have the technology present in order to specially label your items? Are they integrating with the best shopping carts? How smooth is the integration?

A full service warehouse will offer you many different options and ensure customer satisfaction, from receipt of your goods, to shipping your goods, to handling shipping errors.

Are you trying to determine how to pick the best public warehouse for your business? This is a common question that many consider when outsourcing their warehousing. So we’ve compiled a listing of the most important things to consider when trying to pick the best public warehouse.

Location – There are so many things to consider when comparing various locations for your public warehouse. Where is your supplier or manufacturer located? Where are your customers located? Do you want the public warehouse to be close to your company headquarters? All of these are important questions to ask, but be careful to remain objective about the best location for your public warehousing needs. Many times companies lean towards a location close to them, losing out on many of the shipping synergies and cost efficiencies available by locating in another area.

Reputation – Even though warehousing and shipping seems very easy, there are so many factors that make it quite complex for many businesses. For example, companies with unique requirements, kitting projects, and a high number of sku’s are just a few of the examples that can make this seemingly easy function difficult. And it should be of no surprise that there a great deal of companies out there that don’t do a great job of routinely and accurately shipping products for customers. So take a critical look at anyone that you consider, because you don’t want to be caught behind the eight ball with shipping errors.

Technology – This may or may not be an important factor for your business. If you have more of a straight warehousing need, then sophisticated order fulfillment software isn’t going to tip the scale on your decision. However, if ecommerce integration, online reporting, and bar code scanned order management are important, then you need to find a capable company with these competencies.

Service – How much service you get from a company will be a function of the size of your deal and the type of provider you choose. In other words, if you have high volume of storage or orders, you’ll probably command a great deal of service and attention. However, if you’re a smaller company, then you may have to search more strategically for the right sized public warehouse to give you the best mix of service and pricing.

Pricing – Of course, many would argue that the company with the lowest prices would be the best way to go. But this isn’t always true. Sometimes, for example, you get what you pay for. Use your common sense – when a company comes in so much lower than others, you might want to consider why. If something seems too good to be true, it probably is. And furthermore, quality is extremely important. In order for a company to provide high quality services, they won’t necessarily be the cheapest company out there.